Launch App

How OpenPeer Works

With many fiat on/off ramps being cut off around the world and crypto continuing to be adopted, many people are trading P2P (peer-to-peer) for the first time. Even if you’re a regular P2P trader, you’ve likely never traded directly from your wallet before – that’s until you use OpenPeer.

But before we get into how OpenPeer works (and why it’s better than other P2P options!), let’s do a quick recap of P2P trading mechanics.

P2P trading mechanics

To start, let’s review how a regular P2P trade happens. This is the flow if you’re trading on a centralised platform like Binance P2P or Paxful:

  1. Alice (The Seller) posts an ad to sell USDT on a P2P platform. The ad states the available USDT to sell, minimum and maximum trade sizes, acceptable payment methods, and any price rules.
  2. Bob (The Buyer) wants to purchase $100 USDT for ₹8,000 INR. When Bob responds to the offer, Alice is sent a notification and has to decide if she wants to trade with Bob.
  3. If Alice wants to trade with Bob, she accepts the offer and moves the necessary funds into an Escrow (which is held by the centralised platform). Alice’s payment details and payment methods are then shared with Bob.
  4. Bob notices that Alice has escrowed the amount, and makes the payment to the Alice (he follows the details that he received from Alice). After making the payment, Bob marks the payment complete.
  5. Now, a notification is then sent to Alice asking her to release the escrowed $USDT to Bob if she received the payment.
  6. Alice checks if she received the ₹8,000 INR sent by Bob. When she has verified the receipt of this, she releases the funds from the Escrow, which sends $100 USDT to Bob.

Most centralised platforms today let you buy crypto P2P (i.e., in the way described above). Here, you send the fiat money (like dollars, rupees, etc.) to the person with whom you are trading, and receive the crypto in your centralized exchange wallet.

The Difference

If you’re familiar with trading P2P on a centralised platform, you’ll be pleased to know that, experience-wise, OpenPeer is not much different from platforms like Binance P2P. However, the key differences lie under the hood.

The core differences between OpenPeer and a centralised P2P platform are:

  1. Your wallet is your account – Centralised exchanges require you to manage usernames/passwords, or ask you to login via Google, Apple, etc. thereby exposing a lot of information unecessarily. OpenPeer, on the other, requires none of this. You log in and do everything directly from your crypto wallet. No usernames, no passwords, no unnecessary data sharing.
  2. No centralised custodian – Unlike centralised exchanges, we enforce no lower limits on the funds you have in your account. Also, any crypto that you buy goes directly to a wallet you control. On centralised exchanges, crypto that you buy goes your account on their platform. And we all know how platforms shut down overnight.
  3. Decentralised escrow – Beyond holding your crypto for you, these exchanges also own the escrow, so you never really have full control. On OpenPeer, not only are all transactions directly from user to user, but we also don’t control where you escrow the funds1.

P2P trading on OpenPeer

Now, let’s see what a P2P trade on OpenPeer looks like:

  1. Alice (The Seller) posts an ad to sell USDT on the OpenPeer platform, accessible and public for anyone else to find. The ad states the available USDT to sell, minimum and maximum trade sizes, acceptable payment methods, and any price rules.
  2. Bob (The Buyer) wants to purchase $100 USDT for ₹8,000 INR. Bob responds to the offer by signing a message which creates an order on the OpenPeer platform. When the order is created, a Alice receives a notification about the Bob’s intent to transact with her.
  3. If Alice wants to trade with Bob, she accepts the offer and moves the necessary funds into her Escrow contract. If this is Alice’s first sell order, a fresh escrow contract is deployed on her behalf.
  4. As soon as Alice adds the funds, Bob receives a notification that reveals Alice’s payment details and relevant instructions. Also, after Alice adds the funds to the escrow, a 24 hour payment window begins. If the payment isn’t made in this time, the money is sent back to Alice’s original account.
  5. Bob notices that Alice has escrowed the amount, and makes the payment to the Alice (he follows the details that were revealed to him in Alice’s payment details). After he makes the payment, Bob marks the payment complete.
  6. Now, a notification is sent to Alice asking her to release the escrowed $USDT to Bob if she received the payment.
  7. Alice checks if she received the ₹8,000 INR sent by Bob. When she has verified the receipt of this, she releases the funds from the Escrow, which sends $100 USDT directly to a wallet Bob controls.

For more resources including videos on how OpenPeer works, check out our documentation.

We’d love your feedback on the platform. And do join our Discord server, to stay updated and get involved with our global community of crypto enthusiasts. 😄

[1] When selling crypto for the first time, OpenPeer deploys an escrow contract and pays the relevant gas fees on your behalf. This contract needs to be deployed only once per seller, and can be reused for multiple trades going forth. The contract has strict transfer rules to ensure the security of funds, and can be audited here.

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